Greenberg free to talk as AIG confirms further asset sales

According to a report from news agency Reuters late last week, Mr. Greenberg filed an affidavit on March 2 with the New York State Supreme Court, that stated the statute of limitations to prosecute him over the 2000 transaction expired on February 21. U.S. Federal prosecutors have already obtained five convictions and two guilty pleas from former General Re and AIG officials over the transaction , including former General Re Chief Executive Ronald Ferguson. The deal boosted AIG's loss reserves by $500m without any transfer of risk.hideIn the affidavit, Mr. Greenberg said that he invoked his constitutional right against self-incrimination over the transaction in October 2008, as he was giving testimony in a civil fraud lawsuit originally filed in 2005 against him and former AIG Chief Financial Officer Howard Smith. In his affidavit of last week, Mr. Greenberg said that he will now talk. "I am prepared to testify regarding the Gen Re transaction and to be heard on the issues concerning the Gen Re transaction. I, therefore, withdraw my earlier invocation of my Fifth Amendment rights," he said. Last August Mr. Greenberg agreed to pay $15m to settle U.S. Securities and Exchange Commission charges that he altered AIG's records to inflate results between 2000 and 2005. Three months later, Greenberg and AIG resolved years of litigation that followed his exit. AIG agreed to reimburse him and others for as much as $150 million of legal expenses. Meanwhile, following the announcement of AIG’s planned sale of AIA, its Asian life unit to U.K. group Prudential for $35.5bn to help it repay its debt to the U.S. government that now owns 80% of the insurer, AIG also announced that it would sell its 13.8% stake in reinsurer Transatlantic Holdings. The stake is worth about $500m based on last Thursday's closing stock price. Transatlantic said it would buy up to 2 million of the shares in the offering. But less positive news for the U.S. taxpayer came last week as AIG also revealed that guarantees that it wrote on more than $100bn in assets held by European banks could remain on the insurer's books longer than planned. The guarantees, known as capital relief swaps, were sold by AIG Financial Products to enable European banks to reduce the amount of capital needed to cover potential losses on portfolios of residential mortgages and corporate loans. AIG said late last year that it expected the majority of the derivative deals to terminate within six months. But, according to Reuters, AIG dropped the six month prediction in a recent regulatory filing and said the banks "may not exercise their options to terminate the transactions in the expected time frame." According to the report, AIG said a decision by European policymakers to give financial institutions more time to switch to a new enhanced regulatory system may mean more of these derivatives will take longer to close. At the end of last year, the total dollar value of regulatory capital relief swaps written by AIG Financial Products was $150bn. In February last year, AIG said that the regulatory capital relief swaps was one of the reasons why the Federal government should continue to support the insurer. It said a collapse of the financial products division could force some of the banks that purchased the derivatives to raise an additional $10bn in capital.

Greenberg free to talk as AIG confirms further asset sales

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